British American Tobacco - Materiality

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Materiality

Delivering value through excellence in ESG

A key strength of our approach to sustainability is a robust process to identify and understand our most material ESG priorities. Our comprehensive approach to evolving our Sustainability Agenda ensures we keep pace with emerging priorities and stakeholder expectations.

This materiality process also helps us to assess the level of importance of different topics for our stakeholders and our business – those with the highest level of importance form our Sustainability Agenda and are covered in our 2021 ESG Report (9.1 mb) .

Our approach to materiality assessment

A key strength of our approach to sustainability is a robust process to identify and understand our most material ESG priorities. Our comprehensive approach to evolving our Sustainability Agenda ensures we keep pace with emerging priorities and stakeholder expectations. This materiality process also helps us to assess the level of importance of different topics for our stakeholders and our business – those with the highest level of importance form our Sustainability Agenda and are covered in this Report.

Identifying focus areas 

 Each year, we engage with a wide range of stakeholders to understand the priorities most important to them and complement this with ongoing risk monitoring, research and benchmarking. These external insights are mapped against the focus areas identified as most important to our business, based on strategic plans, risk registers, governance meetings and committees, and Group policies and standards.  

Prioritising topics 

We group the topics identified under common themes and use a defined scoring methodology to assess their level of importance to our stakeholders and the BAT Group. In 2020, we also conducted a detailed review of leading practices in articulating the link between ESG risks and opportunities and corporate purpose; how leading companies are balancing their ESG ambitions and best practice in setting smart targets. We also sharpened how we position our contribution to the SDGs, in line with our prioritisation of ESG topics. 

Our materiality assessment

We work with a respected sustainability consultancy, to conduct our materiality assessment using the following three stage process:

  • Stage 1: Identify
    We identify a ‘long list’ of issues using a wide variety of stakeholder inputs. These include issues raised in our stakeholder engagement activities, at both a Group and local market level, with shareholders, investors, suppliers, farmers, local communities, employees, governments, NGOs and other key stakeholders.
  • Stage 2: Assess
    All the issues identified in stage 1 are grouped under common themes and mapped onto a materiality matrix, as shown in the adjacent graphic. This mapping uses a defined scoring methodology, developed by the sustainability consultancy, to assess the level of importance to our stakeholders and the current or potential impact on the BAT Group.
  • Stage 3: Prioritise
    We then prioritise those issues with the highest level of importance to form our Sustainability Agenda and the content of our reporting. Some issues have shifted in their level of importance, including:
    • Diversity, equity and inclusion, which form part of the people and culture priority under our Social pillar. These issues have greater prominence, reflecting the significance of the Black Lives Matter movement and COVID-19 pandemic and the inequalities highlighted by them over the course of 2021.
    • Employee health, safety and wellbeing also have greater prominence, reflecting issues highlighted by the COVID-19 pandemic and more general shifts in stakeholders’ views on working conditions. We also continue to monitor emerging issues and, as the materiality of an issue increases, we will report on it accordingly.

Our ESG focus areas

HIGH Importance to stakeholders and the Group HIGHEST
PRINCIPAL FOCUS AREA
  • Harm reduction
PRIORITY FOCUS AREAS
  • Climate change
  • Water
  • Biodiversity and Afforestation
  • Waste
  • Human Rights
  • Farmer Livelihoods
  • Health and Safety
  • People and Culture
  • Business Ethics
  • Responsible Marketing
  • Regulation and Policy Engagement
OTHER FOCUS AREAS
  • Anti-illicit Trade
  • Board Diversity
  • Executive Remuneration
  • Tax Transparency
  • Stakeholder engagement
  • Data Privacy and Cybersecurity
Key
  • Harm reduction
  • Environmental
  • Social
  • Governance
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